Shares of public sector banks ended with up to 6.5% gains today after Finance Minister Arun Jaitley promised a solution to the growing problem of NPAs or bad loans within next few days.
Bank of India jumped 5.02 per cent, Bank of Baroda surged 4.26%, PNB (3.61 pc), Union Bank of India (3.29 pc) and Allahabad Bank (3.02 pc) on BSE. Oriental Bank of Commerce was up 6.45 per cent.
Buying was also seen in private lenders, with ICICI Bank rising 2.90% and AXIS Bank 0.23%. HDFC Bank was however down by 0.53%
The BSE bank index rose by 1.23% to settle at 24,061.02.
“Banking stocks gained traction today on expectation of announcement of policy for quick settlement of NPAs shortly which kept positive vibes in the market,” said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
Promising a solution to the growing NPA problem in the next few days, Jaitley said yesterday that the resolution being worked out with the RBI will put enough pressure on borrowers to settle dues.
The gross Non Performing Assets (NPAs) of public sector banks have risen to Rs 6.06 lakh crore in December 2016, from Rs 5.02 lakh crore at the end of March 2016.